Thursday, June 08, 2006

The Creature that Ate the (Gaming) World

There's an elephant in the room. No one talks about it, but it's there. Its name is Hasbro, founded as Hassenfeld Brothers in 1923. (Someone later had the good sense to change the name.) They sold textile remnants, and soon moved on to producing pencil boxes and school supplies. Today they control 80% of the billion-dollar tabletop gaming industry.

The story of how they did so is a tale of corporate interest run amuck and of the death of anti-trust legislation in the United States. It's summarized in a single word, monopoly, which is ironically both America's best-known game and one that Hasbro now controls through its corporate buyout policy.

When looking for causes, we can ultimately blame My Little Pony. And G.I. Joe and The Transformers. In 1983 the FCC reversed a fourteen-year old ruling, which had prohibited cartoons based on toy lines. Late that year Hasbro debuted their G.I. Joe cartoon, followed by Transformers in 1984 and My Little Pony in 1986. By beaming these 30-minute commercials straight into the living rooms of impressionable children, Hasbro multiplied their already notable success; the same year that The Transformers debuted, Hasbro began their gaming industry roll-up with their purchase of Milton Bradley.

Today Hasbro controls nearly every mass-market board game of note, including Clue, Monopoly, and Risk (which came to them from Parker Brothers via Tonka Toys), Battleship, The Game of Life, Stratego, and Yahtzee (which came to them direct from Milton Bradley), Parchisi, Scrabble, and Trivial Pursuit (which came to them from Selchow and Righter via the Coleco bankruptcy), Dungeons & Dragons (which came to them from TSR via Wizards of the Coast), Magic: The Gathering (which they won straight from Wizards), and Acquire and Diplomacy (which they got through a super-cheap buyout of Avalon Hill).

The following chart summarizes the most notable of Hasbro's game-related acquisitions:

As I said, that's just the most notable Hasbro purchases. I neglected the 1994 purchase of Waddington's British game rights, which locked up Hasbro's control of foreign rights for the Parker Brother games, and I left out Hasbro's acquisition of individual games like Mousetrap from Ideal Toys (1907-1982), via intermediary CBS Toys. I also didn't chart out their 1987 purchase of rights to Cootie and other Herb Schaper products. The list goes on.

And, I didn't even touch upon Hasbro's purchases of things outside the gaming industry. They own Playskool through Milton Bradley (1928-1968?) and bought Galoob (1954-1998) directly, together solidifying their share of the toy industry. They expanded into electronic toys with Tiger Electronics (1978-1998) and that encouraged them to take a run at the computer game market which included purchases of Atari (1971-1998) and Spectrum HoloByte (1983-1998), which itself included Microprose (1982-1993). (Ultimately this Hasbro Interactive experiment was less than successful and was sold to Infogrames, who promptly renamed themselves Atari, in 2001.)

Suffice to say, Hasbro is now huge, and as already noted their purchases have given them control of the great majority of the tabletop board game industry.

The Industry Today

Today Hasbro runs four different gaming lines.

Milton Bradley increasingly seems to have become Hasbro's kids' line, which befits its origins as an educational and toy company. Family Milton Bradley games like The Game of Life and Scrabble, which still show the Milton Bradley logo, aren't directly linked from their Milton Bradley website any more, which now only admits to games for players aged "3 to 6" or "6 to 8". Heroscape and Star Wars: Epic Duels are two of the very few notable games that Milton Bradley has put out since their acquisition by Hasbro. Parker Brothers, meanwhile, continues to put out a more consistent line of family and party games, but almost nothing new of note since their 1991 acquisition; their biggest releases in that time period are about 50 editions of Monopoly and nearly 30 Trivial Pursuits. For Milton Bradley and Parker Brothers alike, this long period of mediocrity seems to be due to both the corporate retreading of old properties and an increasing number of products that are being sold based largely on licenses to tv shows, movies, and books

Wizards of the Coast, meanwhile, seems to remain oriented toward controlling the roleplaying & CCG industries. Since 2004 they have also been allowed to also run Avalon Hill, which has become a niche publisher of board games oriented toward gamers, drawing somewhat from all of Hasbro's other lines. The results have been mixed. New versions of Axis & Allies and Risk were well-received, while new games Rocketville and Sword and Skull were largely derided. Betrayal at House on the Hill has earned somewhat of a cult status, despite one of the worst rulebooks in gaming history, while Vegas Showdown has received perhaps the best attention from the more serious gamers' crowd. Of all of Hasbro's acquisitions, Avalon Hill seems to be the only brand doing original and innovative work that might be creating games that will still be hits in a generation.

On the downside, Hasbro has pretty liberally ignored any of their acquisition's games that weren't top sellers. The old Avalon Hill catalog has done the worst, with scores of board games totally abandoned. Acquire and Diplomacy are the rarities from AH that have survived. For everything else, trademarks and licenses are slowly being abandoned, but if Hasbro still owns core rights, it doesn't really matter: the games may never again see the light of day. Winning Moves is the only company to take advantage of this. They've received licenses for several old Hasbro games (mostly from the Parker Brothers catalog) and are thus making a business out of classics like Rook as well as "super" and "classic" editions of Hasbro games.

And that's what 80% of the gaming looks like today: a single company that's mainly resting upon past laurels and today's most popular licenses. It's hard to understand how such a short-sighted business model will result in a gaming line that's still viable in 50 years.

The Rest of the Story

The obvious rejoinder to this is, "So What?" Hasbro may be the elephant in the room. It may control 80% of the gaming industry. But how does that affect our style of gaming?

On the one hand Hasbro is the least dangerous type of monopoly. It's a horizontal manufacturer's monopoly, meaning that they have tight control only over the games being made. They don't control either materials or distribution, and via these routes it's still possible for new companies to get into the business.

Despite not actually controlling distribution, Hasbro does have a pretty good lock on sales. If you're Hasbro it's easy to get your games into a Toys 'R Us, and if you're anyone else, it's not. That's the first danger that the Hasbro monopoly offers: it puts a cap on the size of any other game company's ultimate growth through its control of mindshare.

The other danger Hasbro offers is to innovation. Hasbro really hasn't created an endearing classic since they bought up the whole industry, with the possible exception of Heroscape. They're stagnating the mass-market under a garbage heap of licenses and retreads and thus it's unlikely we're ever going to see a well-designed game come out with money behind it.

However, I think it's possible to argue that this doesn't matter, because most innovative growth comes from niches. The majority of the hit American mass-market designs (Monopoly, Scrabble, Trivial Pursuit) came from third parties who brought them to the publisher. More importantly, most of the broader growth and innovation in game design over the last fifty years has come from niche industries. There was wargaming in the 1960s, roleplaying in the 1970s, collectible-card games in the 1990s, and now Eurogames in the 2000s. In each case the core ideas came out of smaller, niche industries, and have slowly been adapted for the mass market. Wargaming trends have been the most successful, with Risk and Axis & Allies just two examples of niche gameplay hitting the mass market.

So it seems that even with a massive behemoth like Hasbro sitting atop the gaming industry, there's still plenty of space for growth.

For now.

I have two bigger, future concerns, however.

First of all, with Hasbro's huge size, and the current anti-anti-trust feeling in the U.S. congress, it would be easy for them to extend their monopoly vertically. What happens to our niche Eurogaming industry if they decide to start creating Hasbro game shops? Or, more directly, how hard would Hasbro have to work to cut out the other 20% of the industry, thus totally killing innovation in gaming?

Second, it should be obvious that Hasbro does see some value in niche gaming. They ended up rolling up the top two wargame companies (Avalon Hill and SPI), the top roleplaying company (TSR), and the top CCG company (Wizards of the Coast). How long can it be before they set their sites on Eurogaming? Would Days of Wonder be willing to accept a buyout? How about Kosmos or Catan Ltd? And then, if history is any guide, how long would it be before Hasbro dropped most of their new acquisition's lines in favor of the couple of best sellers?

At the start of the 21st century, we stand at a cliff. Corporate hegemony lies over the lip, wherein boards of directors rule the world and profits are supreme. Within the gaming world, we've seen this growing trend over the last twenty years, as companies disappear, and with them their less popular titles.

We often talk about the future of gaming, but if this goes on you have to wonder if there will be one at all.

11 comments:

There's no reason in my mind to fear the tentacles of Hasbro. Whether they do or don't buy smaller companies, they won't buy the talent and then put it on the shelf. I can't say that Hasbro has been a bad force for gaming. As consumers, writers, designers and other concerned niches, we're all opinionated about their choices. Overall I'd say they have done more good than harm.

War gaming has improved despite the demise of SPI and AH and in my mind it's because of the basic nature of creative minds to create and then find ways to get their works out to the consumers.

I also think it's very unlikely that board gaming, as we know it, will ever become mainstream. And why should it? MTG, D&D are two examples of games that "almost" became mainstream and in the process generated hundreds of millions in revenue for lowly designers and publishers. That same thing will repeat and if the Hasbros of the world want to buy the carcass after it's been stripped so they can turn it into vanilla games for Walmart, then let them have at it.

I’d note that there are more game companies thriving right now than at any point in history. Rio Grande, Mayfair, Fantasy Flight, Uberplay, Eagle, GMT, Columbia, and others too numerous to mention. And those are just the boardgame specific companies. There are even more foreign companies publishing games than American companies. Hasbro has not stifled innovation in any of those companies.

I'd also note that Parker Bros., Milton Bradley, Wizards, etc. did not take much of a turn for the worse due to a Hasbro buy out. They continued in the same general direction. Hasbro bought the AH line after it went broke and was no longer functioning as a company.

I would end with this thought: Are boardgamers better off now with a Hasbro monopoly on the mass market, or were they better off in the old days with an Avalon Hill/SPI monopoly on the niche market?

I'd argue that Parker Brothers, Milton Bradley & Avalon Hill are all worse off for their acquisition by Hasbro.

Erik Arneson lists two Parker Brother games developed shortly before their purchase among his top 50: Pictionary and Balderdash. Axis & Allies was developed by Milton Bradley just around the time of their buyout. Since then, nothing for either (except as I mentioned, maybe Heroscape).

Over at Avalon Hill, yes they were having problems, and Monarch Avalon had largely lost interest in running a game company. But with their games now pretty much buried, I don't see any improvement.

Wizards, thus far, seems to be fine.

I would agree with your statement that Hasbro isn't (yet) having a bad effect on our niche markets. Heck, they might be doing them a huge favor by stifling innovation within their own companies. Most of the danger that I see from Hasbro (other than the damage already done to the companies they bought) is purely future and speculative.

But since I like to talk about gaming trends in our blog, I figured it was worth spending at least a week talking about potential downside. I'm balancing it out with a few articles about innovation & growth in the field, starting in about two weeks.;)

Let me cast my vote with the anti-gloom and doomers, Shannon. Hasbro's business model is different from the Hans im Glucks and Days of Wonders of the world. Their goal is to repeatedly sell the same games, possibly differently themed, but still the same, over and over again. Ideally, the game will never be played, but stuffed in some closet somewhere.

This attitude is best summarized by Hasbro's republication of the classic Cosmic Encounter. The Hasbro version sold tens of thousands of copies, which would be a major success for any Eurogame publisher. Hasbro considered it a failure and dropped any plans for further expansions.

This reliance on a tiny number of titles may have a negative effect on Americans' view of gaming (although I think that prejudice started well before Hasborg began their shopping spree), but I don't think it represents anything like a threat to those who have discovered gaming. Hasbro buy Kosmos? What's there that would sell the way the company demands? The only game that could possibly qualify is Settlers and I'm sure Hasbro considers that too complex for their audience (and they're probably right). Eurogame companies have nothing to fear from Hasbro because they don't produce the kinds of products they want.

I also think there's been some innovation coming out of the conglomerate. You've already mentioned some of the AH success stories. Talented designers like Rob Daviau, Craig Van Ness, and Stephen Baker have produced quite a few interesting games in the past five years. As others have said, the companies they snapped up weren't exactly making gaming history. Parker Brothers had been in a downward spiral since their sale to General Mills in '68. MB had a brief flowering with the Gamemaster Series, but after that ended, they were back to producing their usual children's and simple family games. I'm not happy that so much of America's gaming tradition is lodged under one roof, but the effect hasn't been as stifling as it could have been and some geniune innovation has seeped through.

I applaud your research and I love the chart, but I don't agree with your conclusions. Right now, Eurogaming is just too small a fish to be gobbled up by a predator like Hasbro. Sometimes, there are advantages to flying under the radar.

Hasbro has had a quite clear strategy in its acquisitions, making sure that it has a dominant market postion in each age category in "analog" entertainment. I reconn that Hasbro will only make new acquisitions if it feels that it has to strengthen/protect its market share in any of these categories. So DoW, Kosmos and alike must get a countable market share before Hasbro even bothers to try an acquisition. In my perspektive I see FFG as the company most likely to be bought up, since FFG's product line reflects Hasbro's the most and it is maybe the most corporate like of the new gaming companies. Overall I do not really think that Hasbro cares that much about talent, they care about market shares.

I think the key is the 2004 decision of Hasbro to abandon Avalon Hill from its East coast MB/Parker Bros design strategy and the subsequent decision of the WotC West coast offices to pick it up as the name of their relaunched boardgame division. The Hasbro company continues to treat Wotc as a separate wholly owned subsidiary that runs its hobby game leg while it sees itself as the non-hobby game portion. So far the two do not mix.

I don't particularly fear Hasbro personally, just as I don't really fear Microsoft anymore either (I'm a long-time Mac user). Neither company is any longer in a position where they can outright kill innovation. Sure, the American market is overwhelmed with retreads and garbage, but those of us who want quality (and there seem to be a few of us) can go overseas and to niche publishers. If Hasbro buys out Days of Wonder, who cares? There is a proven market for quality, and the designers will publish elsewhere and consumers will follow them.

For anyone who can read the market, I think, the signs are good. The small "true" American companies like Fantasy Flight and Eagle (Days of Wonder seems more a Franco-American hybrid) seem to be growing, despite having high prices and quality standards significantly lower than the Germans. Clearly the market for quality boardgames in the US is a long way from being sated.

On the other hand, the contrast between the competitive German market for boardgames and the dysfunctional American one is stark, and everyone - even, and perhaps especially, the smaller companies - would benefit from a more functional competitive environment in my opinion. As an issue of community, this should be of concern to us. If people have to go to significant effort to search out quality, they won't find it, and as such, I do think Hasbro is doing a great deal to hold back the hobby of gaming in the US, for reasons you mention.

But they can't do it forever in my opinion. The market clearly exists, and is growing, and Hasbro can't make it go away.

I think the trick is, as mentioned, that Hasbro isn't buying and stifling the talent. If DOW gets bought by Hasbro, or FF, I suspect that the second the talented game designers and artists find themselves being ordered to rehash lame brands and have their talents being stifled, they'll flee to other companies or start their own. The globalization of production and the internet has altered business models so much that in this industry you don't have to have a huge amount of capital or a distribution chain to be successful. Amazon, other online retailers, and FLGS will continue to do business with games that are good, regardless of who produces them, and cheap chinese manufacturing will continue to make small-scale game production reasonable in price.

I think one only needs look at Avalon Hill and WOTC to see the negative effect Hasbro has on a company they purchase, but at the same time dozens of small publishers like Z-Man have sprung up since then distributing great games. Indeed, much of the explosion of innovation in the gaming industry has happened since Hasbro bought up many game manufacturers like Parker Brothers, even if Avalon Hill and WOTC are more recent acquisitions.

If you look you'll never find me
I've gone gaming I'll be back
Got to ship a few more barrels
Got to trade a brick or two
Got to buy some more provisions
Got to run this train on through
Got to roll a few more 6's
Got to draw a few more cards
Got to shake hands with my neighbours
'Fore I'm back in my backyard
But if you look up to the night sky
That's my spaceship passing by
Give a wave that's me inside her
It's farewell but not goodbye